Smith Corona Hangs On to Typewriter Business : Technology: Personal computers and Japanese competition have made it tough on last U.S. maker of portable typewriters.

G. Lee Thompson is an unabashed flag-waver who speaks proudly of Smith Corona’s ability to keep selling typewriters and word processors despite the odds against it.

Success, so far, has been costly for America’s last portable typewriter maker, but not as costly as failure, said Thompson, the chairman and chief executive officer.

Demand for typewriters has fallen dramatically since the introduction of the personal computer, which allows users to do computing as well as basic letter-writing. Yet Smith Corona, which also sells word processors and last year sold its first PC, has managed to stay competitive--mainly with the Japanese--in appealing to customers who don’t want all the power of an IBM.

“Our biggest problem has been unfair trade practices,” Thompson said. “We have worldwide distribution. We have no distribution in Japan. We have the same problem with our Japanese competitors that everyone else has--they want to play by different rules. . . .

“We don’t mind competition, as long as it’s fair competition. We’ll play in the marketplace with anybody, and win.”

Thompson insists that Smith Corona is on solid footing now, despite technological advancements and other changes that have cost the company thousands of jobs and reduced profits over the last decade.

It managed to improve by developing new products, finding new markets and fighting for itself in the halls of government, Thompson said.

Over its 110-year history, Smith Corona has outlasted most other American typewriter makers, such as Remington. IBM typewriters for offices are still made by Lexmark International Inc. in Lexington, Ky.

At its peak in 1979, Smith Corona employed 4,200 people in Cortland to make its higher-priced, more-sophisticated electronic typewriters and word processors. A factory in Singapore produces Smith Corona’s low-end models.

But by the mid-1980s, the company had all the markings of an industrial corpse, losing more than $100 million in five years as Japanese competitors wrestled away market share and the company struggled to keep up with technology. Employment in Cortland has fallen to 1,400 today.

The New Canaan, Conn.-based company, with a worldwide work force of 3,800, began restructuring in 1983. Three years later, it was purchased for $930 million by Hanson PLC, a British conglomerate that also owns Ground Round restaurants and Jacuzzi spas. Although Smith Corona went public in 1989, Hanson still has a controlling stake.

Overall sales fell last year to $383.4 million from $471.4 million a year ago, but Thompson said positive signs abound. It reduced long-term debt from $70.6 million to $33.3 million, while trimming its inventories by nearly half to $57.4 million.

“The market’s gone down with the rest of the economy, but the company has maintained a good level of profits and its market share, while introducing new products and substantially reducing its debt,” said John Walthausen, a securities analyst with C.L. King & Associates in Albany.

Smith Corona held roughly 50% of the world’s typewriter and word-processor business last year, he said.

Reducing the number of parts in its machines, and thus the cost of manufacturing, has been part of Smith Corona’s success, Thompson said.

The company also found ways to give customers more for their money. Since introducing the first spell correction and dictionary functions on a portable electronic typewriter in 1985 and giving the industry its first personal word processor in 1986, Smith Corona has been a leader in product development, analysts said.

“They’ve found ways to enhance their product. It’s a lot more simplistic to manufacture, but it offers sophisticated capabilities,” Walthausen said.

More than any other factor, Smith Corona’s efforts to expand its markets have been a critical plus, said analyst Carol Neves, who follows the company for Merrill Lynch.

In 1989, it completed a deal with NV Philips, the huge Dutch electronics firm, to supply typewriters throughout Europe. Later that year, it struck a deal to produce Cyrillic typewriters for sale in Russia. Smith Corona now produces typewriters in 14 European and South American languages, Thompson said.

“Four years ago, they weren’t in Great Britain. Now they have 30% of the market. You don’t hear of many companies coming into a market and capturing 30%. Usually, you go into a market and get 2%, so it’s great,” Neves said.

But while Smith Corona doesn’t sell in Japan, it has had to do battle domestically.

One of those fights was waged last year, and in July the U.S. Commerce Department determined that Brother, Kyushu Matsushita Electric and other Japanese companies were guilty of dumping--selling their products in the United States at less than fair value.

“It’s just one constant battle with them,” Thompson said.